Global Market Highlights: Lackluster US Data, Oil Price Reaches US$50, Brexit Vote on June 23

Global Equities

A range-bound in global equities has been observed in most of last week as investors considered lackluster data in US payrolls, Fed’s dovish statement, and the positive recovery of oil price which surpasses US$50 per barrel for the first time in 10 months.

Federal Reserve Chairman Janet Yellen announced in her speech last Monday that they are removing the time frame for the next interest rate hike. Yellen spoke of the “inevitable uncertainty surrounding the outlook for the economy” and that ““New questions about the economic outlook have been raised by recent labor market data.” However, Yellen remains optimistic that economic expansion would still continue, noting that labor market is quite positive despite poor data released last Friday.

US stocks started the week on a shaky sentiment following the uninspiring report last Friday on jobs data – US added just 38,000 jobs in May, the weakest in almost 6 years, but recovered thereafter. Investors took note of the weak US job data as a sign that Fed may hold off on raising interest rates further.

European shares fell earlier on as investors are cautious of weak US payroll data and the upcoming “Brexit” vote on June 23. Nevertheless, share prices did recover on the back of a weaker US dollar and Fed’s dovish statement late Monday last week. Stronger oil prices and a better data released on the German industrial sector encouraged investors to take a risk in the financial markets.

Asian shares were mostly lower as China’s stock market’s was off for a 2-day holiday and yielded a negative data on exports. China’s exports printed -4.1% lower in May, worse than -1.8% in April. However, mainland bourses rallied this week on anticipation of inclusion of A-shares in the MSCI EM index.

Week-on-week, the MSCI World Index closed at 1,688.66, up by 0.89%. Markets were mixed with MSCI Europe down -0.83%, while the MSCI Asia Pacific ex-Japan was up 2.99%.

02-Jun-16 09-Jun-16 Change in %
MSCI World 1,673.77 1,688.66 0.89%
MSCI Europe 115.83 114.87 -0.83%
MSCI Asia-Pacific ex-Japan 406.92 419.10 2.99%
Dow Jones Industrial Average 17,838.56 17,838.56 0.93%
S&P 500 2,105.26 2,119.12 0.66%

Global Bonds

US Treasury prices rallied in response to the following economic releases. ECB starts buying corporate bonds; hence, pulling alternative foreign assets’ yields even lower.

Tenor 02-Jun-16 09-Jun-16 +-bps
3m 0.274 0.249 -2.53
6m 0.462 0.423 -3.96
2y 0.887 0.767 -11.99
5y 1.352 1.221 -13.16
10y 1.799 1.687 -11.22
30y 2.581 2.487 -9.32


US Dollar traded flat with US as unemployment rate fell to 4.7%, lower than the market estimate of 4.9%.

02-Jun-16 09-Jun-16 Change in %
EUR/USD 1.1199 1.1343 1.29%
GBP/USD 1.4431 1.4466 0.24%
USD/JPY 108.96 106.49 -2.27%
AUD/USD 0.7213 0.7437 3.11%
USD/CHF 0.9867 0.9619 -2.51%
EUR/CHF 1.10498 1.09102 -1.26%
EUR/JPY 122.01 120.79 -1.00%
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